Supply chains are becoming more and more complex due to high-mix, low-volume production. However, most planning is still done manually using ERP and Excel. In an environment of ever-growing competition and accelerating markets it is becoming clear that goals such as customer satisfaction and inventory optimization will not be attainable using the current planning methods.
What are the solutions at the age of digitalization?
Digitalization of planning method for Supply Chain Management (SCM)
To remain competitive manufacturers will need to invest in new technologies for the supply chain management. An essential component in this technology is the digitalization of planning methods. It allows for different scenarios to be played through and compared. To achieve such functionality data must be pulled from ERP, MES, WMS, etc. and consolidated. Maintaining multiple Excel tables in each plant, in various raw material depots and finished goods distribution centers will become a thing of the past.
All planning relevant data must be located, collected, and integrated. This is challenging but necessary in order to reflect the dynamic conditions of the entire supply chain in an operation-oriented manner. It allows you to plan, monitor, control and share information with partners in order to make informed business decisions.
In order to realistically plan the dynamic conditions of the entire supply chain, all planning-relevant data must be mapped in real time in a SCM/SCP System.
Get a Complete Overview in Real-time with a SCM / SCP System
Due to the sheer quantity of data involved in supply chain planning the use of manual planning is out of the question. Additionally, numerous seemingly insignificant issues require constant responsiveness because small errors can have large consequences further down the line.
Some companies deploy early warning systems, so-called frontloading management systems, to anticipate changes in supply and demand in conjunction with real-time monitoring. These companies are more efficient in procurement, production, sales and distribution compared to their non-digitalized competitors.
In the search for new planning technologies you are sure to come across to software for the so-called End-to-End Supply Chain Management (SCM), in particular Supply Chain Planning (SCP). This systems are high-end planning systems – who requires an experienced understanding of the practical procedures throughout the supply chain and of the IT systems related to management and communication.
The success to be gained with such an end-to-end Supply Chain Planning system ultimately still depends on the user’s expertise. However, it is still a revolutionary tool! It gives you the ability to coordinate various manufacturing plants, transportation resources, material warehouses, and logistics centers with a constant view to overall efficiency and impact on the entire logistic chain.
Fast simulation by software-based intelligence
Advanced algorithms that have been forged from the practical experience and know-how of the most successful manufacturing companies are at the heart of powerful Supply Chain Planning systems. Thanks to them, the entire supply chain can be orchestrated precisely – just as a conductor directs his orchestra. In other words, all operations involved in the supply chain are coordinated and executed in a uniform, harmonious manner.
Another core function of an orchestrated, end-to-end Supply Chain Planning system is its simulation capability. This allows to see into the future - maximizing flexibility and increasing your ability to react to any possible problems.
An effective and reliable Supply Chain Planning system eliminates the necessity for making chaotic, uninformed decisions; decisions made in reaction to unforeseen problems.
It is thanks to the modern advances and the increased efficiency of today’s software that planning runs no longer take several hours but are now completed within a matter of minutes. This means greater flexibility and speed responding to changes.
Another important criterion of a powerful SCP system is the quick integration into the existing IT structure (ERP, MES, WMS, etc.) without programming.
Fully automatic planning of the entire supply chain
A fully automatic, orchestrated, end-to-end planning system plays a major role in minimizing operating costs. By simulating and comparing results from inventories (raw material, semi-finished goods, finished goods), production, warehouse, etc. these can be optimally coordinated with one another and front-end planned in advanced.
This improved value-added impacts all other aspects of a company. All resources in a company aim to complete their tasks “just-in-time”. When these all function more efficiently due to an effective planning system then a seamless process will be established throughout the whole enterprise.
Simple decisions such as for warehouse replenishment, selection of suppliers, manufacturing sites, transportation resources, production sequence optimization, manufacturing order issuing for individual factories and individual production resources, material orders, etc. are handled automatically by an end-to-end, orchestrated Supply Chain Planning system.
The main advantages of a Supply Change Management system
The first and most important step in digitalization is employing an algorithmic, orchestrated, end-to-end planning system that gives you the ability to simulate the future and enables proactive, precise, orchestrated operations throughout the entire organization!
In this way, a modern Supply Chain Planning system can give you enormous short- and long-term advantages in accomplishing significant goals:
- What-If analysis and simulation comparison directly lead to customer satisfaction and drastic inventory reductions.
- Forward-looking management enables pre-emptive recognition of potential issues and the timely initiation of preventive measures.
- Report function: KPI represent past performance. Of greater significance for management decisions are realistic “Future KPI” which predict inventory fluctuations of raw materials and finished products in various warehouses, resource productivity, manufacturing costs, transportation costs, delivery reliability, and much more.
Other technology building blocks of Industry 4.0 areBig Data, Machine Learning, and IoT, which are all of secondary importance.Without effective, feasible, end-to-end Supply Chain Management all these topics are meaningless.